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tv   Bloomberg West  Bloomberg  February 3, 2015 1:00pm-2:01pm EST

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>> live from pier three in san francisco, welcome to "bloomberg west" were we focus on innovation technology and the future of business. i'm cory johnson. president obama has announced new limits on nsa data collection. nonrelevant information collected on foreigners will be purged after five years. german chancellor angela merkel wants to hold off on negotiations with greece even as the country's current round of bailout funds took fire at the end of the month.
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>> the greek government is obviously still working, which is understandable if you think how few days this government has been in office. we shall wait for proposals and we will enter into talks with them and there will be sufficient opportunities for this. i don't want to comment on every single opportunity bandied about. >> a person familiar with the matter says they are willing to wait until greece faces a cash crunch, giving them leverage over the anti-austerity government. a deal is up in the air with valiant and a pharmaceutical company. lenovo shares up the most in two years after the company reported a 31% rise in the third quarter. the chinese tech giant is the world's largest pc maker started seeing big growth in other areas and boosting smartphone shipments.
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their server business is on track for five alien dollars in annual sales after acquiring ibm's server business. now to the lead -- the fight is on to rule the future of transportation. it may end up being google and one of the companies it has already invested in -- huber -- uber. they have also set up a lab in pittsburgh. not to be outdone, google is said to be developing its own ridesharing service that may be integrated into self driving cars stop which company has the leg up here? joining us the a skype is john leonard. i know you know these worlds well. let's take this piece by piece. i saw eric schmidt yesterday and he spoke cautiously and boast initially about that early investment in uber.
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what do you think google has learned about the uber business? >> it really is an exciting time and i got the chance to speak to uber at m.i.t.. they were getting an academic perspective on self driving cars. it is clear part of the excitement here is all the data uber has. they can map new york city dynamically every five minutes. so there's a dynamic play between getting and using data to better understand the transportation system and get more efficiency out of it. >> the data is the thing that brings these two companies together. i don't think uber as seen as much of a data company as it is. is there more to it than uber's interest in the self driving car? >> the google project, none of
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us can predict the future and i see a lot of the challenges that makes things harder like interacting with people and dealing with traffic cops and snow. the timeline google has set is so aggressive and hoping to roll something out, so i think it is something that could disrupt the uber model if you remove the drivers and someone else controlled that piece of stop my personal opinion is that is a good head strategy. don't be surprised in this area and invest in it and see if they can get a piece of the technology pie in this area. >> should we think of this more as google has an enormous engineering pool of talent there, can uber come close to that by throwing a bunch of money at college kids in pittsburgh? >> i don't think they are just
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typical college kids in pittsburgh. i think of the google project in terms of the wright brothers, almost. it transformative and it might take a long time to pan out. these members of the team came from carnegie melon -- from carnegie mellon. they are rock star robot assists. there are not many of those folks around but you are getting the mentors of those folks and famous robot assists and you're also getting the next generation of students. i was just at carnegie mellon giving a seminar with a packed room really into this stuff. they are going to the place where google got its talent and maybe that's the best place to find it. >> i was at the google campus
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yesterday and saw the car -- it looked like a volkswagen bug but there's no steering wheel. there's a heart attack moment when you get into that. i think it's odd to have these two companies that have never made a vehicle ever except for some things to play with a google, but this is not how car technology has advanced for the last 100 years. hasn't it been fisher automotive were some guy making a windshield wiper and western michigan that works in an alternating pattern or delphi doing whatever delphi does whatever little companies do little pieces of innovation not one company trying to do the whole thing under one roof? >> i think google said they are looking for automotive partners and it's interesting that coming east for some of this technology that it's such a hard problem that you need the variety of
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talents and industries of stop when i was in california this summer, i feel there's this reality distortion field in silicon valley. mountain view has 10 days of rain all of 2014 a 10th of an inch for the whole summer or less of precipitation. >> we've got none in january. it does not snow there. a beautiful warm day in february and everyone else in the country hates them for that. >> one of the things carnegie mellon has in addition to challenging terrain is the robotics institute has a history of systems building. they have built the darpa challenge robots and complex military systems. they really make the hardware and something interesting about this model is they have a large number of research faculty that are first-class academic students and they don't teach.
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they need these big projects. uber can grab the best people in the world and that's the only thing i can think of where you could do something so quickly. >> interesting stuff will stop sound like they've got the right partners. uber isn't the only one interested in self driving cars. anthony foxx there with me yesterday taking a look at the autonomous vehicle. he took one for a spin will talk to us about the future of transportation and help us imagine the next 30 years of transit in the u.s. you can catch us streaming on your tablet apple tv, amazon fire tv -- we are there. ♪
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>> this is "bloomberg west" and i'm cory johnson. shares of petrobras at the center of the world ever largest corruption case are rallying today. there are reports the brazilian president is seeking candidates to replace the ceo. they are being investigated for taking bribes stop fitch just put their ratings and a triple be negative and warned at a for further cut to jump. more than 5358 people have died since mid april fighting in eastern ukraine and the numbers getting worse. tuner 24 civilians killed in the last three weeks alone is fighting between pro-russian rebels and ukrainian forces shows no sign of abating. using the dna of three people to create a child -- u.k. lawmakers are just voting to legalize such
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technology to minimize the risk of genetic diseases parents may be predisposed to. the measure passes the house of lords and if it does, britain will become the first country the world to allow three parent babies. self driving cars could be the beginning of google's transition as they offer and -- offer an uber-like service. eric schmidt showed off the new self driving car to transportation secretary anthony foxx will stop we caught up with him to hear his version of the future of transportation. >> problem we have with transportation is we're looking at is -- at what is right in front of us as opposed to what is way in front of us. what's away in front of us is going to be more tactful in terms of defining our future for hair fall and we would rather be
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in the position of defining our own future rather than letting the future being defined by trends that are going to make it worse. >> what is the biggest trend not being addressed? >> i would say the are two things. one is the funding approach is budgeting to a number, not budgeting to outcomes. if we want to have travel time is reduced over the next 30 years, it's going to mean investing at a much higher level than we are doing today, across the board, not just the federal government. second on policy, such as the question of having the money it's how that money is being spent. looking at the mix of transportation needs we have as a country between highways transit rail, passenger and freight, we have significant challenges level setting with going to optimize our ability to move and we are going to do it.
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>> you've got millenial not consuming or owning as many cars, using public transit to walking and moving to urban areas and the second thing is the growth in urban areas and the urbanization of america on a level we have not seen in 150 years. >> it is interesting to see the growth of metro areas. usually there is a city in the core, a suburban ring around the core at a rural ring around that and that is what we referred to when talk about measure areas. >> you think of cities like new york, boston or san francisco, but you are talking about places like charlotte and albuquerque. >> is picking up a wider swath of america because most population growth is coming into the south and moving west into the areas like you are talking about. it's not just the big
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megacities, it's the medium-sized cities. >> are self driving cars and answer to this or are they another problem dealing with the issues? >> i think there is a lot of promise for self driving cars. both on the safety side in terms of reducing accidents and on the convenience side for consumers. the challenge we are going to have is developing regulatory systems and policies that are more adaptive and flexible that can take a brand-new technology and be able to assess it correctly and help the manufacturer get into the marketplace. >> we have the ceos of uber and lyft quite a bit and i talk about wanting to talk about the regulatory systems on the local level rather than the federal level. what are the biggest federal
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regulatory issues they have to conquer? >> i think they are in a somewhat different category. many of the regulatory systems that govern taxi companies where there are most of the conflicts are at the state and local level. there's very little the federal government has there, but i think the federal government has an interest in ensuring a service that is being done by someone driving and -- someone driving an uber car making sure that person has been background checked so folks can be assured they're going to get where they are going. >> are you saying if the local governments won't take care of these problems at the federal government might have to? >> i believe we have a role to play in urging states to work but i'm not suggesting we should pass laws that do that at the federal level. i do think that's an area the
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states and local government that our urging are going to need to address. >> while you are up there talking about uber and lift, bloomberg news broke a story that google is going to get into a business competing with uber. do you think about things like privacy when it comes to these things, whether it is drones cars or whatever? >> it's a huge issue particularly in these issues like vehicles where connected technology both enhances the experience but also creates vulnerabilities we did not have with the conventional automobile. we have to address that with industries and a lot of these modes with air, rail automobile, we are finding the industry will voluntarily sit across the table from each other and us to figure out how to deal
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with some of these privacy and security concerns. >> dallas u.s. transportation secretary anthony foxx. coming up, what's next for radioshack? the stock has been delisted and you have big tech giants like amazon and brookstone and sprint all looking at radioshack as a possible acquisition. can they save the day? ♪
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>> i'm cory johnson this is "bloomberg west." a u.k. based financial tech
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startup is aiming to democratize international money transfers. that's not how it works -- it's lowering fees and it's looking at lots of different places were currency is trading. joining me to discuss the company's big plan is the company's ceo. you already got a valuation of over a billion dollars and you are hardly off the ground. i think it speaks to the opportunity of money transfer. >> it is absolutely an opportunity and i think it's right in saying the banks are behind the technology curve. >> are they behind in this is this is a charge so much? it's a great business for them to take a huge dig off every time someone moves money from one country to the next? >> i think so. i think that they can is part of the story but they are having a tough time because they have
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lots of different problems to solve and innovating in technology has not been high looking at that. >> is a because the backend systems are so antiquated that innovating the front and does not make a difference? >> you could say that. there's a lot of legacy in banking and it goes back to business models. we came to transfer wise realizing there's a lot of hidden costs when you move money around. whenever you move money from one country to another, some of it goes missing and i found when i was in lending -- in lending, sending money back to my home company -- back to my home country in estonia. >> what you mean missing? >> when i started sending my pounds to euros, started looking at the bloomberg exchange rate. >> so you were getting marked on
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the exchange rate in the bank was putting you last in line for a current to trade at that moment? >> it's more like they gave me a rate which had no resemblance to the exchange rate. this is how banks make money on international transfers. they put a margin on it and that is their fee. even though they tell you they might charge $35 for an international wire they will actually take 3% or 5% off the exchange rate and that's where they really make money. >> i talked to other venture investors who look at these experiences in their travel and they want to not just invest in your company -- you landed peter thiel and richard branson. how do you get these people as investors? is it that personal experience they have when they travel overseas? >> i think it's more about believing in the mission and seeing how we create value.
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people have moved about $4.5 billion and have saved $200 million in bank fees. so we are putting money from bank fees to people's pockets. >> when you look at bitcoin isn't bitcoin the real answer here? that transfers going to be cheaper no matter what you do. >> bitcoin is an interesting technology and has allowed us to go around additional banks. in the long term, we should watch carefully how we use this technology. unfortunately, we see there's a lot to do actually get people to adopt or use bitcoin. >> you think you will be dis-intermediated by bitcoin? >> it's hard to say what eventually -- >> interesting stuff. we appreciate your time.
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radioshack has been struggling for years next to the rise of e-commerce and a lot of screwup from the guys in fort worth. but could add e-commerce giant be looking to save radioshack? that's next. ♪ . .
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"bloomberg west," as you are watching"bloomberg west," where we focus on innovation technology, and the future of business. i'm cory johnson. radioshack has more than 4000 stores in the u.s.. that's four times as many stores as best buy. the radioshack has been struggling for years on the verge of a bankruptcy filing. radioshack is in deep water. could amazon be moving into throw them a life preserver? people say amazon has discussed acquiring some radioshack storefronts. joining us from long beach california is michael packer. dress like a dot com'er.
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this is a fascinating story. it really is a technology company focused on bringing technology to the masses come and has been for a long time. they just fall on your face. >> emphasis is on the masses. radioshack has morphed into a convenience store. they are a great place for a hobbyist to go. if you are trying to build a ham radio of course you go there, because they have all the complements. they have really evolved into the place where ram all bays -- where grandma buys hearing aid batteries. they got competed away by the right aid than amazon's of the world to offer the same batteries that -- at a lot lower pricing. radioshack is seeing its traffic decline forever. it's ironic that we are talking about amazon, they're are a company that put them out of
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business stepping in and throwing them a lifeline. >> i will say, when i look at the numbers, it looks like the business really stinks a radioshack. one is selling battery cables headphone jacks, maintaining an inventory of the tough. if you ok with that business. the one that really crushed them is getting into feature phones and cheap wireless phones as that market particular. it shrunk in favor of smartphones. >> the same time they were groping -- growing their mobile presence, best buy went all out for that share. best buy has done well with phones. i think they were just up against two much competition, a declining market, and the margin and handsets has been bit away so much. plans are less lucrative. radioshack's customer is more of a prepaid customer. those plans are just lucrative. >> -- aren't as lucrative.
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>> they have over 4000 stores there. and you have sprint, and reporting the amazon and possibly brookstone, and even some subset of radioshack looking at salvaging some of those stores. is any of that real estate worthwhile for different business? >> i would guess that about half of the stores are productive run his radioshack stores. i imagine that half of the stores are generating positive cash flow. the other half not. i think those assets make a lot more sense for brookstone and not 4000 maybe 500. i'm baffled why sprint would be looking for more real estate, though that might be a signal that the aggressive pricing promotion is working. i moved my family from verizon to sprint, they did cut my bill in half. amazon, i think, it you never want to put anything past amazon. i think amazon is trying to push
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distribution out as close to the consumers possible sling get same-day delivery. if you can make things happen same-day, by telling you to wait for two days and it will be on your door come or go to get up at radioshack, some commendation is likely. the problem is that everyone likes the better performing radioshack stores, located in the best, highest traffic areas. there probably aren't more than a couple of thousand of those. i don't think a combination of those solutions is going to be the end result. it will be one better -- one bidder buying 500 stores. >> i would've the debt wisely do this. they said they wanted to close 1000 stores, the debtholders would let them do that. i wonder if they saw some value, or because we are seeing that this might be sprint/radioshack
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or brookstone/radioshack, that by keeping the name alive, they keep the cheap releases and some value -- cheaper leases and some value. >> i'm not an expert, but i readings in their financial situation is that creditors are in better shape in bankruptcy. the landlord step behind the creditors. those leases can't be broken unless they file for bankruptcy. i think when radioshack sought permission from creditors, the creditors said no. they were thinking of a force them into bankruptcy, they have a better chance of getting repaid. standard general stepped in, refinancing debt couple months ago. they said that radioshack is in breach of covenants. it really is a messy picture. i'm not really sure -- it looks like the creditors are going to get 100 cents on the dollar. >> is interesting. those leases could be a real game changer. the last elective brookstone mind you, i owned -- full disclosure. i own shares when i was a
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portfolio manager long time ago. it was a small holding. they had about 300 stores, 500 stores. for them to add 500 more stores, for amazon to add 500 doors for sprint to do that -- it would really change all those businesses in a very public way. >> amazon, because they have truly global reach, amazon, 500 stores would be something like 10 in each major metropolitan area. so that's really not that many. i think amazon is the one of those who can actually go up higher. the sprint doesn't make sense to me. i don't know how many stores they own i do know at&t's numbers. at&t only owns 1200 other 4900 stores. the rest are third-party run and operated under the at&t brand. it would surprise me if sprint really wants that many stores, and i can't conceive but they wouldn't want a more corporate owned stores and at&t has. there multiples their size. and it were talking 500, maybe
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1000 and amazon is a liar. i don't think you see all 4000 stores salvaged. >> some irony we're talking about this location, location, location based business that was eaten by mobile. michael factor, -- michael factor, thank you. the return of the podcast thanks to the successive "serial." we have a podcast startup documentary called startup. ♪
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>> i'm cory johnson, this is bloomberg news. audio is hot again, thanks to his success of a serial -- of the podcast "serial." a lot of people are been listening to podcasts. edison research counted in 18%
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surge in podcast listeners in the second half of last year. alex is a former public radiator -- radio producer of planet money and this american life. he founded his own company called gimlet media. he is betting that this come back in audio downloads is here to stay. joining us from new york it's interesting. i want to see what you look like. i've listen to you for so long. you're like a real person. i love this, because i just love listening to audio in the car. i love listening to audio when i run. tell me what has changed to make podcasts work now, when they kind of fell in their face in the air of the ipod. >> i think the smartphone is the main thing that has changed. i think we all now have -- our habits are changing. if i went out to the bank i would make sure that i have my headphones, make sure i have my phone with me so i can hop on a podcast and listen to it when
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i'm running errands. their podcast players that come preinstalled with your phones. i think that has driven a of increased that we see. >> the founder of twitter famously said -- the aim to start a podcast company after they left google. they thought podcast man, that's going to be it. are there execution lessons you are going to learn from the skeletons of podcasters past? >> i don't -- that sort of a daunting story. i'm joined to do something that evan williams failed at. i think that timing is everything. for me, the reason i did this was i saw an opportunity. when i was working a planet money, our audience was growing. it seems like there was a demand for this kind of programming. to me, it wasn't that much
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thinking. if you listen to the podcast, you would know i wasn't thinking that deeply about it. it just seemed like something that needed to be done. so i went out and did it. >> i love your thinking both on a programming level, creating content and a platform as well. you have been chronicling the launch -- how else, with a podcast? let's take a listen to a little bites. >> if i were calling uber and it said it was going to be here in two minutes, and it was all the time you had, what are you doing? >> and making a network of digital podcast, that we will meet -- i'm sorry. >> what will it take to do it? >> it will take $1.5 billion. >> -- when put $5 million.
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-- $1.5 million. >> you're looking for a very specific amount of money. >> after an hour, i look over the chris ault in his hands. >> and his hands said what? >> to give my pitch back to me. >> stop, and the name of god stop. >> stop what you are doing. it was a very humbling experience. going out to try and raise money. i fancy myself a storyteller. when he raise money, you are telling a story of how your company is going to work. i just went out there, i was awful. it took a while to get my bearings and figure it out. that was me pitching chris. >> i see charles to hague is an investor? >> yes, he is.
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>> journalist, when they tell stories, they go in it with questions. i can hear your voice saying i don't know, which is the last thing anyone wants to hear when they are asking for money. you actually don't know what's going to happen in the future. >> it was funny because i went out and try to raise money come i didn't do very well in the beginning. at the same time simultaneously, trying to raise the money, i launched the startup podcast. i launched the startup podcast and the startup podcast chronicled my adventures trying to raise money. i was horrible, i was failing to sell to people. but something about hearing me do that on a podcast all of a sudden -- investment came in once they heard the podcast. there's something about hearing me tell a good story about how he didn't want what i was doing that made people believe that i could pull off what i was doing. i don't know what's going on there, but -- >> i have a horse way behind the
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card here. tilly briefly how the business is going to make money -- tell me briefly how the business is going to make money? >> we're looking at ads supported -- add revenue is one. and then listener. i come from public radio. where there was and is a thriving listener supported revenue model. in public radio, you guilt people and giving you money. i think there's a way we can make it a little more fun, and do a premium -- a freemium model. >> we will not be watching we will be listening for the success of gimlet media, which sounds fantastic. time now for a check of your world headlines. australia's central bank surprised investors by cutting expense mark weight -- rate -- cutting its benchmark rate.
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the local currency remains overvalued. the decisions that australians stock surging to in your seven year high. a pull back and chinese spending continues to hurt the bottom line at lvmh. they posted full-year profit that missed analyst estimates, and that's because -- it led to the first annual decline since 2009. among the reasons -- chinese tourists spending less in hong kong due to pro-democracy protests. alibaba teamed up with the lending club to offer loans. the e-commerce giant announced they would make loans up to $3000 to u.s. companies buying goods from china suppliers ali baba. previously, that service was provided by the bank of china. "bottom line," coming up. mark crumpton joins us. >> a year ago, jenny ellen took
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over a chair of the u.s. federal reserve. a lot has happened -- janet yellen took over as chair of the u.s. federal reserve. what is her., and what are the biggest challenges in your two? michael frazier will give us his take. back to you. >> thank you. "bloomberg west," will be back after this. ♪
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>> i'm cory johnson, this is "bloomberg west." shares of the 3-d printer strata's is getting hammered today. the company says it's going to have to take a write-down of 110 million for its maker about business. at that time, make about was growing at over 400% year-over-year. maker by now growing edges 7%.
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so what happened to the future of a 3-d printed world? i'm joined by kathy would. what happened, they thought this business was going to be the key to a 3-d printed future? is a game over? >> maker but was more about a segmentation strategy focusing on the consumer end. but that's not the main story. make about next or will probably be less than 10% of the revenues. the real story here is industrial. as these stocks have been going down for the past year, but we have witnesses analysts and researchers have been raising their estimates of industrial 3-d printing for the next three to five, to 10 years. they have gone from a billion dollars to $12 billion. we have mckenzie out there who
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thinks in 10 years to 20 years this will be a $580 billion industry. stratasys is the leader in this space, we think it's a visionary, and we think it has a long way to go. >> you have productions that things are going to be great and you have resulted -- results that say it's not now. i wonder with so much innovation from somebody startup companies -- make about was not a stratasys company. why wouldn't that happened at some other company other than stratasys ? what makes it think it's going to be the company leading that business right now? >> i would like to emphasize -- it is in the fourth quarter, if you take out maker bought -- makerbot the revenue was 49%. that's a pretty good growth rate for the part of the business we
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think really matters going forward. i think they are already innovating, and one of the reasons the stock is down is because they are investing against a bigger opportunity than they had expected was going to happen. we are happy they are doing that. most of their analysts are not happy. we invested in many cavities where they chosen to invest against a huge opportunity. and we have done it to some success. >> when i look at these businesses, i want to look at them for technological aspects. i can't look at -- i can't help but look at the accounting of both stratasys three systems, and other. i went to a factory that was open, there was nothing there. i looked at 3-d systems acquiring the service bureaus to myself -- to whom they sell product. i wonder if the companies didn't add it to the hype around 3-d printing through legal but
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accounting decisions that made the businesses look like they were growing faster than they actually are. >> i think in the case of 3-d systems in this last quarter people worried about inventory issues, which smack of something you mentioned. in fact, there is inventory that makermobot cells. i have watched these management teams come together, and i think they have a conservative management team, as a matter of fact, certainly relative to anything else in the industry. especially 3-d systems, which i agree, growth by acquisition in that case i'm pushes up. it's like putting a bunch of operating systems together, -- i'm suspicious of. >> cathie wood. i like your optimism.
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a portfolio manager, thank you very much. we appreciate it. the bwest byte or we focus on one number that tells a lot. >> 676%. >> that's a lot. >> it's the rise of missy elliott songs the streaming on spotify after her super bowl performance. she stole the song -- she stole the spotlight from katy perry. >> people were saying missy elliott introduced to the world by 80 ferry. not so much. she has been around for. click some of her songs are in the top 10 on itunes. >> spotify changes the way the world works. the book and acquire music the way they discover it but it hasn't solved music discovery problem. >> but twitter is out there, and people are talking about this new artist. >> tim, thank you. you get all the headlines on
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your phone, tablet, and bloomberg radio. more "bloomberg west," tomorrow. ♪ . .
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>> to our viewers in the united states and those of you joining us from around the world welcome. we have full coverage of the stocks and stories making headlines today. matt miller compiles all the pertinent facts and figures from january's auto sales. our senior markets correspondent, julie hyman looks ahead to after the bell earnings from chipotle mexican grill


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